policies Wilson had once opposed. He proposed a paper currency, for example, modelled on Peel’s Act of 1844. Income tax would also be assessed, starting at 200 rupees, even as millions of pounds in spending were slashed. ‘I am putting the screw on very strongly’, he admitted.152 He sought to do so with tact. Recycling his strategy from Influences of the Corn Laws, he tried to show Hindus that being taxed was as one with their own ancient laws, codified in the Manu-Samhita.153 In the army he aimed to reduce the ratio of native Indians by shifting some to ‘a great police system of semi-military organization’, which, he claimed, would be ‘cheaper by half a million’, and safer for Europeans.154 Finally, he set up an English system of public accounts, with estimates, annual budgets, and a national audit.
It is no coincidence that these moves all tended to increase the confidence of overseas investors. Wilson was such an investor, and that was his intention. As if to underscore the byways between empire and finance, Wilson arrived in India even as his Chartered Bank was opening branches in Calcutta, Bombay, Shanghai and Hong Kong, buoyed by the opium pouring into China, as well as those more benign-sounding commodities, which in contrast it actually named in its prospectus, circulating between China, Java, Ceylon, India, Manila, Australia and the rest of the region.155
His reforms did more than incorporate India into the formal structure of empire: they made it into that structure’s financial cornerstone. Without the Indian Army, and the Indian revenues that paid for it, Britain could not have projected its power in Africa and the Middle East, let alone Central, South and East Asia. Nor could the international system of multilateral settlements and payments that emerged after 1858 have looked nearly as favourable to the City.156 A stabilized British Raj pulled in capital from London: £286 million, or 18 per cent of the total invested in the empire from 1865 to 1914. The presence of so much foreign capital, in turn, made it crucial to maintain stability, and therewith investor confidence. India was expected above all to ‘keep faith’ with its creditors. Between 1858 and 1898 remittances averaged nearly half of exports, with 20 per cent alone going to debt service and Home Charges, an ingenious system by which Britain debited India for the cost of exploiting it. Meanwhile, the trade surplus India ran with much of the rest of the world allowed it to settle its trade deficit with Britain; and for Britain, in turn, to settle around two-fifths of its own trade deficit, mainly with Europe and North America.157
If his special mission concerned finance, Wilson was far from indifferent to the trappings of empire this brought with it. He was excited by the challenge of India, and his own power to act there, in contrast to London. He described the ‘increased capacity of the mind when removed to a new scene of action … I cannot tell you with what ease one determines the largest and gravest question here compared with in England’, exulting that ‘the Indian Exchequer is a huge machine. The English Treasury is nothing to it for complexity, diversity and remoteness of the points of action.’158 Taking to his new imperial role with gusto, he relished the subtleties of frontier diplomacy as much as he enjoyed the dusty chaos of the financial files before him:
It is a most unwieldy Empire to be governed on the principle of forcing civilisation at every point of it. One day it is the frontier of Scinde and a quarrel with our native chiefs which our Resident must check: another, it is an intrigue between Heraut and Cabul, with a report of Russian forces in the background: the next, there is a raid upon our Punjab frontiers to be chastised: then come some accounts of coolness, or misunderstanding, or unreasonable demands from our ally in Nepaul: then follow some inroads from the savage tribes which inhabit the mountains to the rear of Assam and up the Burrampootra: then we have reported brawls in Burmah and Pegu, and disputes among the hill tribes whose relations to the British and the Burmah Governments are ill defined: then we have Central India, with our loyal chiefs Cindiah and Holkar, independent princes with most turbulent populations, which could not be kept in order a day without the presence of British troops and of the Governor-General’s Agent.159
On his departure for India, Wilson relinquished nominal control of the Economist first to Greg, and then to Bagehot’s best friend, Graham Hutton, who stayed on as editor during his absence in Calcutta. In reality, the paper served the ambitions of its founder and owner till the end. When controversy arose over his first budget, Hutton and Bagehot leapt to defend it, attacking Charles Trevelyan, now Governor of Madras, who publicly objected to its steep spending cuts, tax rises and large procurements for the army.160 Wilson was outraged at this attempt to undermine his authority, but he scolded his surrogates, accusing them in one of his last letters of hurting his chances by going overboard in the dispute.
Trevelyan was recalled for insubordination, yet the budget was swept further into the political storm. In London, Bright and Sir Charles Wood, secretary of state for India, backed the recalled governor. All three put some blame for the mutiny on an overly centralized bureaucracy and in Wilson’s budget they saw those tendencies exacerbated. Trevelyan had been the official most in charge of ‘relief efforts’ during the Irish famine, and later Wilson’s colleague at the Treasury, where both had preached the purest laissez-faire. Yet personally they did not get along. To Trevelyan, Wilson was an unscrupulous climber whose sole aim in India was to become Chancellor of the Exchequer back in Britain. ‘Ordering a salute and giving him a sort of public reception would be funny’, he wrote to Wood, anticipating Wilson’s arrival in Madras. Wilson saw Trevelyan as impulsive and vain, ‘thinking himself able equally to command a squadron, lead an army, or regenerate the civil government of a country’.161 Obituaries for Wilson strongly implied that this last administrative quarrel, and the advent of the rainy season, caused a fever-gripped Wilson, murmuring to Canning about ‘his income tax’ and in early August arranging his will, to go to ‘bed never to rise from it again’.162
Walter Bagehot’s Dashed Doubts
Founder, owner, editor, political high-flyer – no other leader of the Economist wore as many hats as James Wilson. But the name most associated with the paper he started is not his, which faded after his death in India in 1860. Lasting fame instead awaited his son-in-law and successor, Walter Bagehot, who remains not only the best-known editor of the Economist, but a totemic figure in and beyond its pages. Drawn as much to religion, literature, art, history and political gossip as the effect of tariffs on the price of salt, Bagehot forms a vivid contrast to Wilson, with far broader interests. In addition to money market summaries, Bagehot wrote two and often three or four leading articles a week on current events for sixteen years; in 1861 he wrote at least thirty-one just on the American Civil War. From these anonymous articles, as well as signed essays in the National Review, Fortnightly Review and other journals, Bagehot spun three major works between 1865 and 1873: The English Constitution and Physics and Politics, describing the subtle and secret evolution of government in England, and the world; and Lombard Street, on the causes and management of financial crises. Economic Studies, a guide to political economy and the lives of its most famous theorists, was unfinished at his death in 1877.
This prospectus has landed Bagehot on the reading lists of the Anglo-American ruling class since the late Victorian period. The jurist James Bryce called Bagehot ‘one of the greatest minds of his generation’ and ranked his constitutional insights above those of Tocqueville and on a level with Montesquieu.1 ‘The greatest Victorian’ pronounced the historian G. M. Young, after scanning a list that included Eliot, Tennyson, Arnold, Darwin and Ruskin.2 While John Maynard Keynes had some doubts about his art criticism, he warmly recommended Bagehot’s behavioural studies of the middle-class men who flourished in nineteenth-century Britain. ‘Bagehot’, Keynes noted in 1915, ‘was a psychological analyser, not of the great or of genius, but of those of a middle position, and primarily of business men, financiers, and politicians.’3
